The player evaluations in the recent transfer market windows have been nothing if not a latter day Hurufist numerological contortion of Reality.
In this post, which is largely for subscribers only, we address the pseudo-market in both a macro- and a microeconomic fashion in order to discover not only the Real pricing mechanisms but also a true assessment from the market of what constitutes a superstar.
Let us start off with the concept of value...
What is value?
In the transfer market, value is determined by two primary factors - pricing and timing.
To establish a Real price on a footballer is an increasingly complex formulation and, furthermore, these formulations are opaque to virtually everyone involved in the market. We have held numerous conversations with club owners, managers and agents over the last two years and only one Premier League manager of our acquaintance has even the remotest idea of how to thoroughly price a player.
The rest are just bobbins...
Most rely on fake consultants, guesstimations from university 'intellectuals', an over-reliance on pseudo-stats from ProZone, Opta and the like. It appears that a cutting edge approach simply involves a selection of the type of operation that one wishes to establish (see below) and a few laterally thought angles to gain some 'extra' knowledge from the statistics packages on offer.
Of course, everybody is using the same software and plotting the same lines on the same charts and, consequently, are making the same evaluations of players.
There is no Alpha in the transfer market, only a highly retrograde and unsophisticated Beta.
The Real price is dependent, unsurprisingly, on Reality.
Yet, beyond the simplistic nature of the assessments outlined above, the only further additions to the pricing process are the players age and their brand, and hence the degree to which they are able to be marketed.
Among a panoply of parameters that are not included in player evaluations are the following...
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We could go on.
And on and on...
And even if the full array of inputs were to be included in a player value, the pricing is set against a warped continuum of pricing where, although the free transfer is rooted at zero, the maximum transfer fee is a stratospheric point - there is no upper limit, the current price zenith being a function of a range of macro inputs and territory-specific configurations.
Timing is the second key intelligence.
Market timing is the major differential between your average market participant and the top analysts - it is critical to be neither too early nor too late.
Taking the Big Four in England, Wenger and Ferguson are value-aware in their timing (the latter only in recent seasons) whereas Ancelotti and Benitez are out of their depth and, consequently, destroy value with its obvious negative impact on the clubs' finances.
When clubs are stretched thinly by debt, these assessments matter as player transfers are the biggest expenditure in footballing Hollywood - FollyWood...
The financial pressure upon Liverpool is exaggerated by the idiocy of Benitez in the market while United are just about treading water due to the combination of excessive success and carefully timed market activities.
And, for an assessment of what happens when wide-ranging dodginess surrounds a club, check out the states of Southampton and Portsmouth following their respective experiences of Redknappery - the ultimate destruction of value for proprietary gain.
Of course, the astuteness of management may be undermined by the stupidity of executives as is the case at Arsenal, where the debts related to the white elephant property development at Highbury were a very short-sighted strategy in the teeth of the Depression.
Although unusually constituted teams distort the transfer pricing continuum, their impact is usually short-term as their structures are unsustainable in the longer term - think Manchester City and the oil market, Chelsea and the fetishes of one oligarch or Real Madrid and the repeat of the Galacticos strategy.
And while we are on the subject of the transfer continuum, we can use the historical data to determine who were the Real Historical Greats.
In the last half century, the record transfer fee has spiralled from the £152,000 that Internazionale paid Barcelona for Luis Suarez in 1961 to the £80,000,000 that Real Madrid paid for Ronaldo this summer.
The psychology of the record transfer is a very interesting impact on the overall transfer market. Record transfers are made by Big Men who are keen to display their financial power through the showcase of the ultimate transfer fee. So, it is a given, for such antisocials, that the desire for a record transfer is part of the ego state.
It is the amount above the current record that determines the Real quality players, and the behavioural assessments that create this template affect other participants in the deal too - players, managers, agents etc.
Applying a simplistic formulation to the last 40 years demonstrates that the ratio of the current record transfer to the previous record is indicative of the Real quality of the player.
Here is your QED as we provide you with the hierarchy:
1. Johan Cruyff (Ajax - Barcelona) 1.84
2. Diego Maradona (Boca Juniors - Barcelona) 1.71
3. Diego Maradona (Barcelona - Napoli) 1.67
4. Christian Vieri (Lazio - Internazionale) 1.49
5. Paolo Rossi (Juventus - Vicenza) 1.46
6. Ronaldo (Manchester United - Real Madrid) 1.43
7. Roberto Baggio (Fiorentina - Juventus) 1.33
8. Giuseppe Savoldi (Bologna - Napoli) 1.30
9. Ronaldo (Barcelona - Internazionale) 1.30
10. Zinedine Zidane (Juventus - Real Madrid) 1.28
11. Jean-Pierre Papin (Marseille - Milan) 1.25
12. Ruud Gullit (PSV Eindhoven - Milan) 1.20
12. Gianluca Vialli (Sampdoria - Juventus) 1.20
14. Kaká (Milan - Real Madrid) 1.19
15. Alan Shearer (Blackburn - Newcastle) 1.15
16. Hernan Crespo (Parma - Lazio) 1.11
17. Denilson (Sao Paulo - Real Betis) 1.10
18. Gianluigi Lentini (Torino - Milan) 1.09
19. Luis Figo (Barcelona - Real Madrid) 1.04
There are, in effect, three templates for transfer activity and all clubs/agents must choose one of these options.
One might choose to nurture a youth policy and sell on the unwanted products in return for some external inputs.
Or, one might choose to go for the Galacticos-strategy where youth policy is sidelined so that marketable entities might be purchased at a price to provide benefits across the balance sheet.
Or, one might select the most creative option - a combination of the first two scenarios as currently being implemented by Manchester United.
Some hyperrealities are impossible to price using conventional evaluation methods as the players involved are so warped by their inappropriate associations that any attempt at establishing a Real price is complicated by murky inputs.
How on earth does Sir Ferguson go about putting a price on our heroic helicopter pilot, Michael Owen?
We suggested when Owen moved to Newcastle that there should be no transfer fee nor wages and that he should, in fact, be paying the club in order to play.
Sir Ferguson has only travelled a part of this route in that the club will be paying Owen whenever he steps onto the pitch.
History shows that this produces a footballing version of negative equity as the combination of market hyperrealities do not allow for players like Owen to be pleasing all of their stakeholders at any one time.
This is ScudamoreWorld after all.
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